A Reduction in Net Exports, All Other Things Unchanged

question 60

Multiple Choice

A reduction in net exports, all other things unchanged

• A) results in a movement up along the aggregate demand curve.
• B) reduces aggregate supply.
• C) reduces aggregate demand.
• D) does not change aggregate demand or aggregate supply in the domestic economy.

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Definitions:

Diminishing Returns to Scale

A situation where, as more inputs are used, the incremental increase in output decreases.

Economies of Scale

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Constant Returns to Scale

A situation in production where increasing the inputs exactly proportionally results in an equivalent increase in output.

Economies of Scale

The financial benefits gained by businesses as a result of their operation size, wherein the expense for each unit produced typically drops as the scale expands.